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T3's Take 3: FOMC Minutes Show Rate Hike Uncertainty


Today's financial recap and tomorrow's financial outlook.

Today on T3 Live

T3 Live cordially invites you to our first annual Finance Festival, scheduled for November 6-8 in sunny Miami, Florida.

Scott Redler will be speaking about trading and technical analysis, and he'll be joined by a truly impressive team of Wall Street experts, including Barry Ritholz, Nicole Sherrod, Evan Lazarus, Doug Robertson, Josh Brown, JC Parets, and many more.

We've even booked a good old-fashioned bull vs. bear debate between Jeff Saut, Chief Investment Officer of Raymond James, and John Mauldin, founder of Mauldin Economics.

Read about the event here.

FOMC Minutes

The Fed's minutes for its July meeting were released early today as the news embargo was breached.

The overall picture did not seem to have changed with the release, with the timing on a rate hike remaining uncertain. The minutes noted that there was no dissent at the July meeting, and most officials saw conditions for a rate hike approaching but not yet achieved.

Most officials expected downward pressure on inflation, and noted deterioration in bond market liquidity.

Risks from Greece were seen to have somewhat diminished with more attention given to China.

World Equity Markets

US stocks once again failed to generate positive momentum, even with the Fed appearing to be in no hurry to raise rates.

One headwind was oil. Crude oil prices fell over 5% today to new multi-year lows on an increase in US inventories.

Markets picked up slightly after the release of the Fed minutes, but the gains were short-lived and the S&P 500 closed down 0.8%.

European stocks dropped on the commodity fears. European miners were particularly weak due to disappointing earnings from Glencor PLC.  Greek markets rallied after Germany ratified a $95 bailout for the country. The Athens stock exchange closed up 0.32%. The DAX and CAC fell 2.1% and 1.8% respectively. 

Some Asian markets reversed after yesterday's drop. Vietnam decided to value its currency by 1% in response to the yuan, triggering fears of a currency war.

The Shanghai Composite dropped over 5% before ending the day up 1.2%. Japan's Nikkei closed down 1.6% and the Korean Kospi dropped 0.9%.

Target and Lowe's

Lowe's (LOW) released its second-quarter earnings report this morning, missing analysts' estimates. EPS missed by four cents, coming in at $1.20. Revenues beat slightly at $17.3 billion vs. the expected $17.2 billion. The company has missed its earnings projections four times in the last eight quarters, and revenues grew at the slowest pace in five years. The reduced profitability was caused by numerous promotions for its products. Competitor Home Depot (HD) rallied yesterday after posting an earnings beat and upping its guidance. Lowe's shares fell in the pre-market, but finished up 1.9%.

Target (TGT) beat on earnings this morning. EPS beat by eleven cents at $1.22. Revenue was in-line at $17.4 billion. CEO Brian Cornell stated on the conference call that he is trying to turn around the retail chain. He mentioned that stores aren't stocked enough, which is a symptom of a lack of focus. Target shares rallied 0.7% today.

Thursday's Financial Outlook

US economic news for tomorrow will include initial & continuing claims, Bloomberg consumer comfort, existing home sales, the Philadelphia Fed business outlook, and the leading index.

Overseas economic news will include Swiss trade balance, and British retail sales.

Bon-Ton Stores (BONT), Sears Holding (SHLD), and Tech Data (TECD) will release their earnings reports before the open tomorrow. Gap (GPS), Hewlett-Packard (HPQ), (CRM), and ScanSource (SCSC) will release earnings after the close.
No positions in stocks mentioned.
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